HB1151 • 2026

RELATING TO INCOME TAX WITHHOLDING.

Labor Taxes

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: NAKAMURA (Introduced by request of another party)
Last action: 2025-12-08
Official status: Carried over to 2026 Regular Session.
Effective date: Not listed

Plain English Breakdown

The official summary and text do not provide specific dates for when the bill's provisions would be implemented, only that it applies to taxable years beginning after December 31, 2024.

Changes to Income Tax Withholding

This bill changes income tax withholding rules by removing a limit on the tax rate used in calculations and allowing more flexibility for standard deduction allowances.

What This Bill Does

Removes the maximum tax rate that can be considered when figuring out how much income tax needs to be withheld from employees' paychecks.
Gets rid of the rule that treats standard deductions as if they were withholding exemptions.
Gives the Director of Taxation permission to set a standard deduction amount that is more or less than one whole exemption for income tax withholding purposes.

Who It Names or Affects

Employees who have taxes withheld from their paychecks.
Employers who withhold taxes from employees' wages.
The Director of Taxation, who sets rules for standard deductions.

Terms To Know

Tax rate: A percentage used to calculate how much tax needs to be paid or withheld.
Standard deduction allowance: An amount that can be subtracted from income before calculating taxes, set by the Director of Taxation.

Limits and Unknowns

The bill does not specify how much the standard deduction allowance will change.
It is unclear what impact these changes will have on employees' take-home pay.

Bill History

2025-12-08 D
Carried over to 2026 Regular Session.
2025-01-23 H
Referred to FIN, referral sheet 3
2025-01-23 H
Introduced and Pass First Reading.
2025-01-21 H
Pending introduction.

Official Summary Text

RELATING TO INCOME TAX WITHHOLDING.
Income Taxation; Withholding; Exemptions
For taxable years beginning after December 31, 2024, (1) repeals the maximum tax rate that may be considered in determining the amount of income tax that must be withheld and the requirement that a standard deduction allowance be treated as if it was denominated as a withholding exemption, and (2) for the purpose of income tax withholding, permits the Director of Taxation to prescribe a standard deduction allowance in an amount more or less than one whole exemption.

Current Bill Text

Read the full stored bill text

HB1151

HOUSE OF REPRESENTATIVES

H.B. NO.

1151

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO INCOME TAX WITHHOLDING.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
�
Section
235-61, Hawaii Revised Statutes, is amended by amending subsection (c) to read
as follows:

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"(c)
�

For each withholding period (whether weekly, biweekly, monthly, or
otherwise) the amount of tax to be withheld under this section shall be at a
rate that, for the taxable year, will yield the tax imposed by section 235-51
upon each employee's annual wage, as estimated from the employee
'
s current wage in any withholding
period[
, but for the purposes of this subsection of the rates provided by
section 235-51 the maximum to be taken into consideration shall be eight per
cent
].
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The tax for the taxable year
shall be calculated upon the following assumptions:

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(1)
�
That
the employee's annual wage, as estimated from the employee's current wage in
the withholding period, will be the employee's sole income for the taxable
year;

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(2)
�
That there will be no deductions therefrom in determining
adjusted gross income;

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(3)
�
That in determining taxable income there shall be a standard
deduction allowance, which shall be an amount equal to one exemption (or more
or
less
than one exemption if so prescribed by the director) unless the
taxpayer:

���������
(A)
�
Is
married and the taxpayer's spouse is an employee receiving wages subject to
withholding; or

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(B)
�
Has
withholding exemption certificates in effect with respect to more than one
employer.

���������
[
For the purposes of this section, any standard
deduction allowance under this paragraph shall be treated as if it were
denominated a withholding exemption;
]

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(4)
�
That
in determining taxable income there also will be deducted the amount of
exemptions and withholding allowances granted to the employee in the
computation of taxable income, as shown by a certificate to be filed with the
employer as provided by subsection (f); and

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(5)
�
If
it appears from the certificate filed pursuant to subsection (f) that the employee,
under section 235-93, is entitled to make a joint return, that the employee and
the employee's spouse will so elect."

����
SECTION 2.
�

Statutory material to be repealed is bracketed and stricken.
�
New statutory material is underscored.

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SECTION 3.
�

This Act, upon its approval, shall apply to taxable years beginning
after December 31, 2024.

INTRODUCED BY:

_____________________________

BY REQUEST

Report Title:

Income Taxation; Withholding; Exemptions

Description:

For taxable years beginning after December 31, 2024, (1)
repeals the maximum tax rate that may be considered in determining the amount
of income tax that must be withheld and the requirement that a standard
deduction allowance be treated as if it was denominated as a withholding
exemption, and (2) for the purpose of income tax withholding, permits the
Director of Taxation to prescribe a standard deduction allowance in an amount
more or less than one whole exemption.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.